Booysendal platinum project held up by power and water problems

Northam Platinum CEO Glyn Lewis says the development of Booysendal will take much longer than the five years indicated by the conceptual study as the company is grappling with power and water issues.

Author: Tessa Kruger
Posted: Monday , 25 Aug 2008

JOHANNESBURG -

Northam's Booysendal mine is expected to take longer than the anticipated five years to be developed and start production as the company faces serious infrastructural problems; the worst of them water and power supply.

Northam Platinum CEO Glyn Lewis said today although the company's conceptual plan for Booysendal indicated it would take five years to get the mine into production, the practical realities of power and water availability on the South African Bushveld meant it would definitely take "much longer". A R50m ($6.5m) bankable feasibility study for the mine is underway and will be completed in the second half of 2009.

Booysendal is a very significant asset for Northam as it has the potential to double its existing production of 292,989 PGM ounces while the planned phase one mine will only exploit 15% of the orebody of 103m ounces over 30 years. The mine also means diversification away from its one deep-level, difficult-to-mine Northam operation.

Lewis said the conceptual study undertaken in February assumed that power, water and all necessary infrastructure would be available for the development of a mine that would deliver 400,000-480,000t of ore per month.

However, the availability of power was a major issue and has led the company to consider building up production in modular units of 120,000t per month. Lewis said this would allow the company flexibility in its development of the mine, allowing it to move from cluster to cluster before starting stoping in worst case scenario.

The CEO said Northam required 16MW for the cold commissioning of the plant, 40MW for the first modular system at Northam and 80-100MW for the whole mine. Northam has applied to Eskom for 40MW and is currently in discussions with the official power supplier.

Northam is investigating a number of alternatives for power supply, such as coal-fired turbines. This forms part of the feasibility study.

In terms of water, Northam will benefit from the government's De Hoop dam project scheduled to be completed in 2011. Construction of the dam has started already, but it is possible that it will not be completed on time.

Challenges that will delay the development of Booysendal also include the availability of infrastructure in the surrounding towns.

Lewis indicated that Northam Platinum was "castigated" earlier for the capital cost of Booysendal which amounts to R7.1bn ($923m), but this was the total cost of developing the mine from surface to two kilometers down-dip. Other platinum juniors have since also revised their capex upwards.

He pointed out however, that this amount would be spent over years and the company was still in position to execute joint ventures, mergers and acquisitions since it had R780m ($101m) in the bank.

Lewis confirmed that the company could undertake a joint venture or sell the southern portion of Booysendal which lies adjacent to Aquarius Platinum's Everest South. He said the company had a better understanding of the northern part of the property on the eastern limb as it had done extensive drilling here.